Stock Market Game™ Glossary

AMEX The American Stock Exchange in New York City.

Asked Price The price a seller will take for a stock at a specific point in time, the same as offer
price.

Asset Anything owned, such as real estate, stock, money, equipment, supplies, etc.

At the Market An order to buy and sell a stock at the best price currently available.

Auction Market As in an auction, stocks are purchased from the person willing to sell for the
lowest price and sold to the person willing to pay the highest price.

Available Equity The amount of equity left for buying and short selling stocks after you subtract
the initial margin requirement from the value of your portfolio. Available equity comes into play
when a team wants to purchase stock on margin, paying for only part of the stock and
borrowing the rest needed to make the purchase. A team must be able to pay 50 percent of the
price (called the initial margin requirement) of the stock they want to buy. To calculate the
available equity:

Available Equity = Total Equity - [(Value of Longs Value of Shorts) x .50]

If this number is negative, all buy and short sell transactions will be rejected because the team
is not meeting the 50-percent initial margin requirement.

Balance The amount of money in an account. A positive balance means there is cash in the
account. A negative balance means the amount of a loan (margin) has been subtracted from
the account. In the Stock Market Game™, each team begins with a $100,000 balance. All
purchases, broker's fees, losses on short sales, and interest charges are deducted from the
balance.

Bear Someone who believes that many investors in the stock market will lose money.

Bear Market A period of falling stock prices that lasts for several months or more. The opposite
of a bull market.

Benefits of Trade The monetary advantage a buyer or seller gets out of trading a stock.

Bid Price The price buyers are willing to pay for a particular stock at a given time.

Blue Chip Common Stock of a large, stable corporation, and often a stock in a major index such
as Standard and Poor's 500, NYSE, or AMEX.
Board of Directors The highest decision-making group in a corporation, usually headed by a
chairperson.

Bond An interest-bearing certificate of public or private debt, usually for a fixed period (for
example, 10 or 20 years), issued by a corporation or government body.

Brand Name A trademarked name of a product.

Broker An individual or business that specializes in bringing together buyers and sellers of
stocks.

Broker's Fee A fee charged by a broker for conducting a transaction. The Stock Market Game™
charges a one-percent fee on all transactions. You can find your team's fee totals beginning
from the start of the game listed on the team portfolio.

Bull Market A period of rising stock prices that lasts several months or more. The opposite of a
bear market.

Business A commercial or industrial enterprise that produces goods and/or services.

Business Cycle A period or term that provides a picture of the state of economic activity by
looking at variables like the rate of unemployment and changes in the real Gross Domestic
Product.

Buying on Margin Buying stock on credit. Buyers must usually pay a percentage of the stock's
price. In the Stock Market Game™, a team must pay 50 percent of the stock's price when buying
on margin.

Buying Power Using the available funds in its portfolio, the most a team can purchase and short
sell while still meeting the 50-percent margin requirement. Remember that broker's fees and
interest charges reduce a team's ability to borrow because they reduce the balance of funds. To
calculate buying power:

Buying power = Available equity/ initial margin requirement

Capital Goods Buildings, tools, machinery, and other equipment or items used to produce
goods and services.

Capital Human-made resources used to produce goods and services. People use capital goods
to produce and distribute goods and services.
Capital Markets Markets where buyers and sellers trade securities, such as bonds and stocks.
Capital markets are vital for economic growth because they generate the money for businesses
to start and expand.

Capitalism An economic system of private ownership of capital. In other economic systems, the
government or other groups own some or all capital.

Cash Balance The amount of money in a team's portfolio. At the beginning of trading in the
Stock Market Game™, the cash balance is $100,000. When trading begins, the cost of all stock
purchases, along with interest payments, trading losses, or fees is subtracted from the cash
balance. Interest earned, stock dividends, and trading gains are added to the cash balance. If
the cash balance is zero, any new buy or short-sell transactions will be funded through
borrowing on margin. A negative cash balance represents the amount of money borrowed on
margin.

Certificate of Deposit (CDs) A certificate given to someone who agrees to deposit a certain
amount of money in a bank for a specific period of time, often several months or years. In
exchange, the bank pays the depositor interest on the money.

Change in Demand (for a stock) An increase or decrease in the desire of people to buy a stock.

Change in Suppply (for a stock) An increase or decrease in the desire of people to sell a stock.

Circular-Flow/ Circular-Flow Model A model illustrating the interdependence and overall

operation of a market economy. The circular-flow model is a diagram that shows how
households and businesses interact with each other in the product and resource market.

Civilian Labor Force All employed or unemployed people at least 16 years old and not in the
military.

Clerk An employee of a brokerage house who transfers orders and information between
stockbrokers in an office and floor brokers at a stock exchange.

Closing (or Last) Price The trading price of a stock at the time the market closes daily trading.
The Stock Market Game™ uses the closing price for all purchases and sales of stock.

Collateral Property pledged by a borrower that will be transferred to the lender if the borrower
cannot repay the loan. In the Stock Market Game™, stock is used as collateral.

Commission A fee brokers collect for helping people buy and sell a stock. In the Stock Market
Game™, a 1-percent fee is changed on all stock transactions. The amount of commission a team
has paid is in the Account Summary. Each individual commission fee paid is listed in the
Transaction History. To calculate commission:
Commission Fee = Value of Trade x .01

Common Stock A share of ownership in a company. Owners of common stock receive a share of
a company's profits in the form of a dividend or bear a share of its losses up to the amount
invested in the stock.

Competition The rival efforts of two or more people or businesses acting independently that
result in one gaining market share at the expense of the other by offering a better price or a
higher level of quality in goods or services.

Compound Interest Money earned on a deposit plus interest earned up to the present.

Consumer A customer who buys the products or services a business produces.

Consumer Price Index (CPI) The U.S. Department of Commerce calculation of the average prices
of goods and services many people buy frequently.

Cooperative A type of corporation, like a credit union, that is owned by the people who use its
services.

Corporate Bond A corporate bond is like an IOU given to someone from whom a corporation
borrows money. Owners of these IOUs receive fixed-interest payments from the borrowing
corporation until the IOU is repaid at a given date in the future.

Corporation A business owned by stockholders. Corporations have legal rights and

responsibilities.

Cost Often expressed in dollars. Another way to express cost is "true cost" or opportunity cost,
the second-best alternative people give up when they select their first choice. If a team has
narrowed down its purchase options to two companies, the true cost could be considered the
stock the team decides not to buy.

Cost Averaging Averaging the cost of multiple trades (buys or short sells) of the same security.
In the Stock Market Game™, trades of the same secuirty will be combined into one line in
Account Holdings and Realized Gaines/ Losses. To calculate the cost average, divide the total
cost of all trades in the same security by the total number of shares traded.

Costs of Trade The time and money buyers and sellers spend to find one another and arrange
trades.

Credit A promise of later payment.

Customer A consumer who buys the product or service offered by a business.

Cyclical Stocks Stocks, such as high-priced consumer goods and capital goods manufacturers,
which are significantly affected by business cycle fluctuations. Because people are more likely
to spend money on high-priced goods during good economic times, these stocks show more
growth during expansions and generally decline during recessions.

Dealer A business that specializes in buying and holding stocks for resale to the public.

Defensive Stocks Stocks for companies that produce goods or services people needed no
matter how the economy is doing. Even if the economy is in recession, people still need to eat,
buy clothes or medicine, and turn on the lights. So stocks such as medicine, food, clothing, and
public utilities are relatively unaffected by business-cycle fluctuations, generally decline less
during recessions, but show less growth during expansions.

Delisted When a company is performing poorly for an extended period and its stock falls below
an exchange’s minimum standards for trading, it is delisted, or removed from trading on the
exchange.

Demand The extent to which people want to buy a resource, good or service.

Demand (for Stocks) The desire to buy a particular stock and the willingness of buyers to pay for
the stock at the price the seller wants to sell it for.

Diversification When an investor buys and holds stocks from various industries in a portfolio.
Diversification helps protect buyers from the risk of losing money if one stock goes down in
price. Diversification is based on the idea that not all stocks are going to go down in price at the
same time, so a falling price in one stock will be offset by rising prices of stocks in other
industries.

Dividend A part of a corporation’s profits paid, in money or shares, to every person that owns
the corporation’s stocks, for each individual share they own. In the Stock Market Game™,
dividends paid will be listed in Transaction History and included in the total equity of the
portfolio.

Dividends per Share The part of a company’s profit that is paid for an individual share. This
figure is calculated by dividing the latest total payment of dividends by the total shares of
common stocks the company has issued.

Dow Jones Industrial Average The average of the share prices of 30 companies selected by Dow
Jones and intended to provide a measure or gauge of the overall state of the market.

Early Phase of Development When a company is just putting a product on the market for the
first time and hoping sales will grow rapidly. Opposite of late phase of development.
Earnings per Share The amount of profit earned per share of a company’s common stock. This
figure is calculated by dividing the company’s latest total profit by the total number of shares of
common stock it has issued.

Economic Growth An increase in an economy’s output in an expanding economy.

Economize To make financial decisions by choosing the best combination of costs and benefits
from an assessment of possible alternatives.

Employee A person who works at a business.

Entrepreneurship The vision, ingenuity, energy and risk-taking qualities needed to create and
run a business.

Equilibrium Price When buyers want to buy a stock at the same price sellers want to sell it. Also
called the market-clearing price.

Equity The amount of ownership in a thing, such as a business, building, home, etc. In the
Georgia Stock Market Game™, equity is the total value of a team’s portfolio, also called total
equity.

Equity in Portfolio The value of a portfolio after all the stocks have been sold, excluding broker’s
fees. The resulting value is used to determine team rankings. To calculate equity in portfolio:

Equity in portfolio = (Ending) balance Value of long positions.

Equity Financing When companies sell stock, they are selling a small part of, or equity in, the
company they own. Equity financing is when a company raises money by selling equity in its
business, usually through stocks.

Exchange A market for buying and selling items such as stocks.

Expenses The money a company pays out or sets aside for wages, materials, and other costs.

Exports The amount of goods and services people sell to people in other countries.

Factors of Production Resources such as labor or land used to produce goods and services.

Financial Capital Assets, such as stocks or bonds, that produce income through dividends or
interest.

Financial Markets Markets that direct savings into assets like stocks, bonds, and bank accounts
that pay depositors for the use of their savings. Commercial banks, savings and loans, credit
unions, insurance companies, brokerage houses, pension funds, and investment bankers are
some of the businesses found in financial markets.

Floor Broker A member of a brokerage house who completes a customer's buy or sell order on
the floor of a stock exchange.

Gain Any monetary increase over the original purchase price received from the sale of stock.

Good A physical item produced by businesses. Pizza, clothes, and cars are examples of goods.

Government Securities An IOU issued by the U.S. Treasury to borrow money as treasury bills,
treasury notes or treasury bonds. Owners of these IOUs receive fixed interest payments from
the Treasury at a given date in the future.

Gross National Product (GNP) The total spent on all finished goods and services produced for
the marketplace in a country during a year. Rapid growth of GNP indicates a healthy economy.

Growth Stock A stock whose earnings and price are expected to show big increases.

Human Capital The skills, knowledge, and experience people use to be productive.

Human Resources The time or labor people contribute to the production of goods and services.

Imports Goods and services brought in for sale from another country.

Incentive A benefit that encourages people to buy a product or service.

Income Statement A summary of a company’s revenue and costs for a year.

Income Stock A stock that has paid sizable dividends in the past and is likely to do so in the
future.

Industry A group of companies that produce or sell the same kind of product or service.

Inflation An increase in the general level of prices you pay for goods and services. A popular
measure of inflation is the consumer price index.

Information Costs The cost, measured in money and time, of gathering information to make an
informed choice in a market economy.

Initial Margin Requirement The percentage of collateral needed to finance a purchase or short
sell transaction, 50 percent in the Stock Market Game™. Margin requirements keep buyers
from taking on too much debt by limiting how much credit they can get. Like the Stock Market
Game™, the U.S. Federal Reserve also sets margin requirements. Also, because buyers must use
stocks in their portfolio as collateral when buying on margin, margin requirements protect
lenders of credit by keeping enough collateral in a buyer’s portfolio. The idea is that if the
market should go down and the buyer can’t pay back the credit, there will still be enough stock
left in the portfolio to give something back to the lender. See also maintenance margin
requirement. To calculate initial market requirement:

Initial margin requirement = .50 (Value of long positions Value of short positions).

Initial Public Offering (IPO) When a privately owned company sells stock to become a publicly
traded company, the first time the company sells its stock is called an initial public offering
(IPO) or “going public.” In the Stock Market Game™, IPOs will be available for trading after they
have been added to the Stock Market Game™ system.

Interest The amount paid for borrowing someone else’s money. This amount is usually
expressed as an annual percentage. It is calculated by dividing the amount of interest paid in
one year by the amount borrowed.

Interest on Cash Money received for cash held in a bank account. In the Stock Market Game™,
your team is paid interest weekly on its average daily cash balance at an annual rate of .75
percent. To calculate interest:

Interest on Cash = Cash Balance x (0.0075/52)

Interest on Loans Interest on loans is charged by totaling the balances (add if cash and subtract
if a loan) at the end of each of the seven calendar days in the Stock Market Game™ week
(Friday through Thursday) and dividing the net result by seven. If the average daily balance is
positive, no interest will be charged that week. If it is negative, interest will be charged and is
calculated by the following formula:

Interest on Loans = Average Daily Balance x 7/360 x Interest Rate/100

The 360-day year is the basis commonly used by banks to calculate interest charges, the so-
called bank rate of interest. The interest rate is the same rate used by brokers at the beginning
of the Stock Market Game™ and is on your portfolio as part of the interest charge entry.

Investment Something you buy that can help you make money by using it, like a tractor if
you’re a farmer or a printing press and paper if you’re a printer. Any equipment or good used
by a business. Stocks are also an investment because they can make money in the form of a
dividend.

Investment Banker A business that gives a corporation advice on how to raise money and also
sells issues of stocks and bonds.

Labor The work people do to produce goods and services.

Late Phase of Development When a company’s product or service has been on the market for a
while, and sales are no longer expected to grow rapidly, that company is said to be in a late
phase of development. Opposite of early phase of development.

Law of Demand People want to pay lower prices rather than higher prices for goods and
services. Contrast with law of supply.

Law of Supply Producers of goods and services want to sell at higher prices rather than lower
prices. Contrast with law of demand.

Limit Order An order to buy or sell a stock at a certain or a certain price. A buyer’s limit order
for $20 per share would be completed only if each share can be bought for $20 or less. A
seller’s limit order for $20 per share would be completed only if each share can be sold $20 or
more.

Limited Liability When a shareholder’s maximum loss is legally limited to the amount he or she
has invested in a corporation’s stock.

Liquidate To sell or short cover a stock or other asset. To liquidate a portfolio, all open positions
must be closed. In the Georgia Stock Market Game, a team does not need to liquidate its
portfolio at the end of the session. That is done automatically. A team that liquidates its own
portfolio will be charged a one-percent broker’s fee.

Listed Featured on a securities exchange.

Listed Stock(s) Stocks that have been approved and listed for trading by one of the organized
stock exchanges, like NYSE, AMEX or NASDAQ. All over-the-counter stocks are unlisted stocks,
even if they are quoted by NASDAQ and reported in the newspaper or online.

Long Position A stock that is bought. The value of a stock held in a long position is the current
price per share times the number of shares held. In the Stock Market Game™, the “Value of
Longs” figure in the Account Summary shows the current value of all the stocks in your portfolio
that are in the long position.

Long-Term Investing Buying stock and holding it for many years in the hope that the value of
the stock keeps pace with stock prices in general.

Loss A stock sold below the original purchase price is sold at a loss.

Lot A collection or package of stocks. See round lot and odd lot.

Maintenance Margin Requirement The minimum margin requirement that a team portfolio
must maintain when borrowing on margin. In the Stock Market Game™, the maintenance
margin requirement is 30 percent. That means if the total equity in a team’s portfolio falls
below 30 percent of the value of both long and short positions, that team will receive a margin
call and will have to sell or short cover some of its stocks. Maintenance Margin Requirement is
also known as Minimum Maintenance. To calculate Maintenance Margin Requirement, use the
absolute value (positive value) of the Value of Shorts:

Maintenance margin requirement = 0.30 (Value of long position Value of short positions)

Margin Buying stock on credit with the legal promise to pay in full by a specified later date.

Margin Call A warning that the total equity in a team’s portfolio has fallen below the 30 percent
maintenance margin requirement. A margin call is a request for additional equity to meet the
maintenance margin requirement. A team that receives a margin call has three weeks to meet
the 30 percent requirement. The team can then meet the 30 percent requirement if its holdings
increase or if it sells or short covers a stock(s). The proceeds of any sale or short cover will be
used to pay off some of the money the team borrowed to reduce the amount on margin. If the
team’s holdings don’t increase enough to meet the requirement or the team doesn’t sell any
stock within three consecutive weeks, the margin requirement will automatically be paid by
liquidating (selling) enough long and short positions, beginning with the lowest priced stocks,
until the minimum maintenance requirement is met.

Market Buyers and sellers exchanging with one another.

Market Economy A system where people and businesses functioning as consumers, producers,
workers, savers, and investors make their own economic decisions based on the supply and
demand for various goods, services, and resources.

Market-Clearing Price When the price for a quantity of a good or service demanded by
consumers is equal to the price for a quantity of a good or service supplied by producers. This is
also called the equilibrium price.

Marketplace Where buyers and sellers come together to trade.

Mark-to-Market A weekly adjustment to a team portfolio balance for the amount of gain
(decline in value of a short position) or loss (increase in value of a short position) caused by
price changes during that week.

Money Market Account A bank account that pays interest and allows a saver to withdraw
money at will, often by writing checks.

Mutual Fund A savings fund that uses money from a pool of savers to buy a wide range of
securities, such as stocks, bonds and real estate. Professionals manage the fund. Mutual funds
allow small amounts to be invested and allow you to diversity investments.
NASDAQ An electronic marketplace where more than 5,400 companies list their stocks. Brokers
and dealers around the country communicate and trade with each other by computers. Every
securities firm has NASDAQ computers that show the changing prices, second by second, as
well as every trade that takes place.

Natural Resources Resources occurring naturally on earth such as water, minerals, land, and
timber.

Net Cost per Share For stocks in the long position, the amount of money spent on each share of
stock, including the commission. If multiple trades of the same stock were made, the net cost
per share will be an average of the net costs per share of each trade. To calculate net cost per
share:

Net Cost per Share = Price of each share of stock x 1

Net Equity Gain The amount of money your team has gained or lost since the beginning of the
current Stock Market Game™ session. To calculate net equity gain:

Net Equity Gain = Total Equity - $100,000

Net Income A company’s revenue minus its expenses. Also called earnings or profit.

Net Interest The amount of interest received on a cash balance minus any interest paid on a
margin loan. Stock Market Game™ net interest is listed in the Account Summary and individual
interest activity is listed in Transaction History.

New-Issues Market A market in which a corporation sells new stock to raise money to start-up
or expand, often called the primary market.

NYSE The New York Stock Exchange, one of the organized stock markets in New York’s Wall
Street district.

Odd Lot A package of less than 100 shares of stock.

Offer Price The price a seller will take for a stock at a specific point in time, the same as asked
price.

Opportunity Cost Cost is often called opportunity cost to emphasize the opportunity given up.
For example, if a team is considering a stock purchase and has narrowed down the options to
two companies, the opportunity cost would be the stock the team decides not to buy.

Orders Written instructions on handling a stock transaction.

Over-the-Counter Market (OTC) A market without the central trading floors of the formal stock
exchanges. Instead, over-the-counter trades occur as brokers and dealers trade with one
another by using computers and telephones.

Ownership The right to use something and enjoy its benefits.

Paper Profit When the market value for a stock exceeds the amount paid for it. Paper profits
exist only on paper when the stocks haven’t been sold yet.

Parent Company A business that owns and controls another company.

Partnership A business owned and managed by two or more individuals who receive all the
profits and bear all the losses.

Penny Stock Stock priced at less than $5 per share.

Percent Return The percent gained or lost in the team’s portfolio since the beginning of the
Stock Market Game™ session. To calculate percent return:

Percent Return = Net Equity Gain /$100,000

Percentage Yield The amount of dividends received per share of stock divided by the stock’s
price. The yield is always stated as a percentage. For example, if the dividend is $1 and the
stock’s closing price is $10, then the stock’s yield is calculated as follows:

(dividend ¸ closing price) x 100 = Percentage Yield

($1 ¸ $10) x 100 = .1 x 100 = 10 percent

Pink-Sheet Market Another name for the OTC market. The “pink sheets” are lists of OTC stocks
and the price dealers are offering to buy and sell them. These lists are printed on pink paper
and distributed early every morning to the trading community.

Portfolio A selection of investments used to produce an income or return. Portfolios can be

financial, as in a stock portfolio, or personal, as in investments in human capital.

Positive-Sum Game An activity where all individuals can gain money without reducing another’s
amount of money.

Preferred Stock Preferred stock, like common stock, represents ownership in a company.
However, company dividends are distributed to preferred stockholders before holders of
common stock are paid. Preferred stockholders usually are paid a fixed dividend. Should the
company go bankrupt, preferred shareholders would receive payment before common
stockholders.
Price (of a Stock) An amount agreed on between a buyer and a seller that defines the exchange
rate between a stock and money.

Price Limit The maximum price a team is willing to pay per share when buying or short covering
a stock or the minimum price a team is willing to accept per share when selling or short selling a
stock. Teams can enter a price limit when entering a transaction in the Enter a Trade section.
For example, if a team is buying a stock that is now selling for $40.00 per share and doesn’t
want to pay more than $43.00 for it, they would enter a price limit of “04300” (the decimal is
implied). Teams can also set a minimum price for a sell transaction. The use of a price limit is
optional and serves to protect investors against sharp market movements.

Price-Earnings Ratio (P-E Ratio) The price of a stock as a multiple of its earnings per share. The
P-E ratio is calculated by dividing the stock’s last closing price by the earnings per share. For
example, if the stock’s closing price is $12 and earnings per share are $1, then:

closing price ¸ earnings per share = P-E Ratio $12 ¸ $1 = 12.

Primary Markets Those markets in which stocks are offered for sale the first time.

Private Property Rights Laws or customs that allow individuals to retain the benefits of property
ownership for private use.

Proceeds The value of a stock selling transaction. The price times the number of shares minus
the broker’s fee is the net proceeds.

Producer A maker of goods and services.

Product A good or service produced by a business.

Product Markets Markets in which businesses sell goods and services they produce to
consumers.

Productivity The amount of goods and services produced for each hour of work.

Profit The difference between revenues and the costs of producing or selling a good or service.
Profit is a return for taking the risk of running a business.

Prospectus A booklet used in raising money that contains important facts about a company and
the people who run it.

Proxy A power of attorney granting authority to cast a vote on behalf of a shareholder at a

shareholder’s meeting.

Quote The highest bid by a buyer and lowest price asked by a seller for a stock at a given time.
Real Gross Domestic Product (GDP) The total market value, adjusted for inflation, of all final
goods and services produced in this country during a specific period.

Realized Gains and Losses The total amount of profit or loss realized from the sale or short
cover of a stock. Interest received or paid and dividends received are also considered realized
gains or losses. Any stock that is still held in your portfolio will not be listed in Realized Gains
and Losses. To calculate realized gains and losses:

Realized Gains & Losses = Proceeds – Original Cost

Recession A decline in the real Gross Domestic Product (GDP) for a period of at least six
months. During a recession, businesses produce fewer goods and services.

Relative Price One price compared to another. Relative price is the ratio between prices. A
collection of relative prices makes up the price structure of a market.

Resource Markets Markets where land, labor, capital and entrepreneurship are bought and
sold.

Resources Land, labor, capital and entrepreneurship required to produce goods and services.

Retained Earnings The amount of profit a company keeps to buy new equipment, buildings, and
other resources to expand and modernize.

Return The amount earned on savings or investment. This amount is usually expressed as a
yearly percentage.

Revenue The total income a company receives before subtracting its expenses.

Risk The chance of losing money.

Round Lot 100 shares of stock. Ten round lots equal 1,000 shares.

Saving Setting aside some of today’s income for future spending.

Savings Account A bank account that pays interest on the money deposited.

Scarcity When things like time or money are limited, so they cannot satisfy everyone’s wants.

Seat The official right to trade on a market floor.

Secondary Markets Those markets in which stocks can be bought and sold once they are
approved for public sale.
Securities Corporate stocks, corporate bonds, and governments IOUs.

Securities and Exchange Commission (SEC) A U.S. government body that sets rules and
regulates trading on public exchanges.

Sell To exchange for money.

Service A task performed by businesses for consumers. Doctors and babysitters, for example,
provide services.

Short Cover Buying back a stock originally borrowed from a broker in a short sale.

Short Position Stock that has been short sold is referred to as being held in a short position. A
short position is the total number of stocks contained in a team portfolio that have been
borrowed from the broker or sold short. The value of short positions is simply the sum of each
short position multiplied by the current price. See also long position.

Short Sell/Short Sale Borrowing shares of a stock from your broker to sell on the open market.
At some point, you must cover the short or buy enough shares to return those you borrowed.
Short selling is a strategy used by those who think the price of a stock is going to decrease in
the short term. The idea is to sell the borrowed stock now at a higher price, and once the value
of the stock falls, to buy it to replace the borrowed stock. The profit is the difference between
what is paid per share and what is received per share. To calculate a short position, multiply the
current price per share times the number of shares sold short.

Shortage When the number of shares people want to buy is more than the number that people
want to sell at a given price.

Short-Term Investing The buying of stocks in order to sell them quickly in the hope that money
will grow faster than the general level of stock prices.

Sole Proprietorship A business that is owned and managed by one individual who receives all
the profits and bears all losses.

Specialist A broker on an exchange who trades in certain stocks at a specific location, or post,
on the trading floor. Each specialist has an assigned post where all trading occurs. Specialists
quote the current prices of stocks traded at their posts and complete limited orders.

Specialization A situation where people concentrate their efforts where they have an
advantage.

Stable A stock price that is steady or consistent.

Standard of Living A measure of an individual’s or a family’s quality of life. People have higher
standards of living when they have more goods and services or more leisure time.

Stock A share of ownership in a company. Owners of stock receive part of the company’s profits
or bear some of its losses up to the amount of money they put into the stock.

Stock Exchange One of the organized stock markets with a centralized trading floor. In this
market, auction-type trading allows traders to sell stocks to the highest bidder or buy stocks
from the lowest supplier. Markets like the NYSE and AMEX are stock exchanges. Other regional
stock exchanges are the Boston, Cincinnati, Intermountain (Salt Lake City), Midwest (Chicago),
Pacific (Los Angeles and San Francisco), Philadelphia (Philadelphia and Miami), and Spokane
Stock Exchanges.

Stock Market A market where the public trades stocks that someone already owns. Stock
markets allow people to buy and sell stocks quickly and easily. These markets are often called
secondary stock markets. Examples are the New York Stock Exchange and the American Stock
Exchange.

Stock Split The division of a stock into a larger number of lower-priced shares. A stock split
allows a business to encourage trading of its stock by reducing its price per share. The Stock
Market Game™ automatically adjusts a team’s stock holdings if and when those stocks are split.

Stock Table An alphabetical listing of the transactions on the stock exchanges.

Stockbroker A broker who accepts orders to buy and sell stock and then transfers those orders
to other people who complete them.

Stockholder An owner of a share of stock.

Supply The different quantities of a resource, good, or service that will be offered for sale at
various prices during a specific time period.

Surplus When the number of shares people want to sell is more than the number that people
want to buy at a given price.

Team Portfolio A weekly record of all transactions, activities, and positions of a team. It is
typically updated daily.

Total Equity The total value of a team portfolio and the figure on which team rankings are
based. To calculate total equity:

Total Equity = Cash Balance Value of Longs

Treasury Bills Short-term IOUs that the federal government repays in one year or less.
Treasury Bonds Long-term IOUs that the federal government repays after one year but within
10 years.

Treasury Notes Medium-term IOUs that the government repays after one year but within 10
years.

Trend A general upward or downward movement of something.

Unemployment Rate The percentage of people in the civilian labor force who have no jobs but
are actively looking for work.

Unrealized Gain and Loss The difference in the initial purchase price of a stock and the current
value of the stock. The gain or loss is unrealized, because the stock has not been sold or short
covered.

Venture Capitalist An individual or organization that invests in new businesses in exchange for
partial ownership of the company.

Volume In a stock table, the volume shows the number of shares, in hundreds, that were
traded for the day. For example, the number 8 would mean 8 x 100 = 800 shares were traded
that day. This number does not include so-called odd lot transactions, those less than 100
shares. Some newspapers refer to volume as sales.

Voluntary Exchange A trade or transaction between a buyer who wants to buy and a seller who
wants to sell.

Wall Street A generic term for New York-based stock exchanges like the NYSE or AMEX, named
for the area of New York where the exchanges are housed.

Yield Money returned to investors for each share they own, assuming a profit was made during
the previous quarter. Yield usually comes in the form of a dividend.

Zero-Sum Game An activity involving more than one person, where someone can gain money
only if another person loses an equal amount of money.

Resource:
Georgia Council on Economic Education
GCEE.org